Iran orders licensed cryptocurrency miners to stop operations
The Iranian government has ordered licensed cryptocurrency miners to temporarily shut shop due the extreme winter taking a toll on the country’s power grid during the cold months.
Tavanir, the Iran Power Generation, Distribution and Transmission Company, told authorized rigs to halt the energy-intensive mining of cryptocurrencies until further notice as the country faces major power outages in many cities.
Nevertheless, the state electricity company warned that illegal cryptocurrency mining in Iran accounts for nearly 85% of the industry’s consumption. As such, officials regularly accuse unlicensed operators of using vast amounts of electricity, draining more than 2GW each day and causing 20 percent of power blackouts nationwide.
According to industry estimates, around five percent of global BTC mining is taking place in the Islamic Republic. The flourishing industry allowed Iran it to earn hundreds of millions of dollars from selling cryptocurrencies, which were used to mitigate the impact of Western sanctions.
Earlier in May, the national electricity company announced a four-month ban on mining cryptocurrencies. Authorities lifted the ban in mid-September after licensed facilities had voluntarily shut down their operations to ease the burden.
FinanceFeeds webinar: Expert panel to discuss market data for multi-asset brokerages
Iran legalized bitcoin mining in 2019
While crypto miners are getting pushed out of many countries, the power-hungry industry in the Islamic Republic got the green light to legally operate. Iran was among the first countries in the world to recognize cryptocurrency mining in 2019. Since then, the country has established a licensing regime that requires miners to have a licence, identify themselves, pay a higher tariff for electricity, and to sell their mined bitcoins to the government.
Although mining bitcoin is finally profitable again, recently the business has become more expensive due to a bidding war for mining equipment. The rising tide of Bitcoin prices allows buyers of the latest ASIC machines to resell them at premiums of at least 70 percent.
Bitcoin mining is a very competitive industry as miners worldwide are verifying transactions while securing the network for economic incentives. Additionally, the global demand is growing in lockstep with Bitcoin price. The abrupt upside movement of the bitcoin price for most of the year meant solid business for crypto miners as they are making a lot of money confirming blocks.
